Market Exposure – How Long Are You In?

It’s interesting when you consider that now a days – I spend far more time “out of the market” than in.

For as much time and effort spent, you’d likely think the opposite but….as the years go by, and as you learn to “pick your spots” – you find yourself doing a lot more waiting around than anything else.

I know it’s difficult when you are first starting out. Every “blip” feels like an opportunity lost and every minute feels like eternity while you eagerly await the next chance to trade. You practically “jump” at every little move – envisioning yourself “hitting the next big one” time and time again.

That doesn’t happen to me anymore. In fact, I can’t remember the last time my heart raced – let alone picked up a few beats. Finally you come to a point where “you make your plan”, you “trade your plan” and the plan just works.

I’d say the amount of time “in the market” vs “out of the market” is likely 25% of the time.

I dig into smaller time frame charts for fun, and place little trades here and there, but for the most part I’m usually sitting near 85% cash – watching and waiting for the next “real opportunity” to come my way.

Granted….these days – they don’t come as often as I’d like either but…….you can’t “make it happen”. You need to learn to be patient.

Real patient.

Oh! Oh! What’s that I see? Is the Dollar rolling over? No! It can’t be! Oh and what’s that as well? Is the Nikkei even gonna “make it” to 16,000? Is that GBP still pushing higher, do I see a “touch of strength” in JPY?

19 Responses

How long? usually too long… watching my profits go to zero. After two years of trading I am still a newbie and my initial plan was to buy gold/silver when there is a correction, fundamentals are better and better so it must go up, right? 🙂

And I keep doing same mistakes again…bought silver at 19 few months ago…watching it go to 25 (+50% profit in my account), hoping to take some profit around 30 and here we go…silver at 19 again my SL at BE so position closed. 0 profit.

As a newbie I have a pretty good entry points, not risking to much, but I keep holding on to these positions forever, targeting +100% profit or more….ending up at BE at best.

BTW, Kong…did you get in on Crude oil as you suggested support area around 92? Looks good now, climbing over $95 today. Do you have a price target? Because my targets are usually way off….I would target probably $200 or so 🙂

I trade oil futures pretty regularly. In terms of direct trading of the commodity, this isn’t a great time for setting and forgetting longs as usually oil corrects from November-ish to March-ish. I did though take a long recently and I am looking to book profits over 100 on the Jan WTI contract. Max of 102-ish. A new near term high is really unlikely until late spring. Usually fuel demand drops by 3 or 4 percent across the northern hemisphere over winter from what I have read.

Ya for sure. Looks like the JPY pairs all printed neutral to bearish candles today. CAD and NZD probably the most bearish daily candle set ups -CAD especially. Others pretty neutral. Nikkei trade should be of great interest this evening. Best be getting a decent bottle of wine for tonight…could be a late one. Although I am sure whatever bearish action occurs overnight it will just be retraced and then some during NY trade. So, why bother trying to get good overnight positioning….bloody hell

For me recently (by recent I mean the past 14 months probably) my normal “go to” strategy has also sidelined me in many ways… In hindsight, for the better most of the time, as patience will always reward us :D.

As a day forex trader, and medium term holder of certain investments, I do however, often find myself on the side waiting for something to develop in agony and complete boredom like many traders out there! To counter this I developed a system which I like to call, The waterboy…. As the waterboy is the poor kid who always gets sidelined…while waiting for the big play off game where he gets subbed in!

This is a purely mechanical/technical system based on very low risk and is traded on the 1M time frame, and gets me through these meandering, Mississippi, Rio Grande, Yangtze river moments of the market! Don’t get me wrong here guys, I am looking for 4- 12 pips here on an average trade! Very low exposure and banking probably less than 0.1% per trade but it keeps me ticking 😀

It is a “wake up in the morning, grab a coffee, realize there is low volatility, nothing but sideways action, more rubbish being spewed forth by…(take your pick of central bank here…), grab another coffee (or beer by this stage) type of trading system.

Its more of a testing ground for me, to feel out the market with some smaller orders across the board on really tight price action, and generally looking at overall strength and weakness in crosses. I find watching price action on 1M time frame can be quite a good distraction during the patience game….Daily PA is like watching grass grow, 4H is watching some high school football team play their final, while watching 1M is like the Stanley cup play-off’s or the world series! In low volatility, uncertain, or simply hectic and sidelined times, I find myself returning to this “waterboy,” more often than not just to keep sharp and stay in the game hydrated and ready for the real move.

In any case, this could be called my “low exposure,” play, as I find even in times while waiting for the “real” trade we can find some little goodies hidden in there as well that may turn into something later on 🙂

I just get the feeling we are so close to a couple of weeks of yen strength against the big three. GBP/JPY at major resistance along with USD/JPY and Eur/jpy. Ties in well with the indices leaning over and oil rising. Everything falling into place. Time for retracement

Good post Kong. Patience is certainly a big trait to have as a trader – something I need to work on! Quite amazed though that 75% of your time you are on the side lines – that is a high percentage, and a great insight – thanks!

FOREX KONG’S DISCLAIMER

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial adviser if you have any doubts.